When a nation seeks to engage in international trade, it must adhere to various rules and regulations. These include tariffs, levies, taxes, exchange rates, and other legal standards. Entrepreneurs and businesses within the country are expected to comply with these regulations to effectively conduct their economic and financial activities. The field of political economy examines how laws and regulations impact the economy.
The nature of political economy varies based on a nation's political philosophy. For example, the United States adheres to capitalism, democracy, and a free market; China follows Confucianism, communism, and a centralized state; and Iran operates under a theocracy, Islamic socialism, and presidential democracy. Each country has its own unique economic and political philosophy. Global socio-economic, political, and security challenges emerge when these political philosophies are questioned due to prejudice, self-interest, and hegemony. Embracing rationality involves accepting political and economic diversity, which can lead to a spontaneous order in determining international values and norms.
Let’s examine the three main political philosophies that prevail globally. Understanding their nature can better equip us to address future socio-economic, political, and security challenges.
The government of the United States consists of three distinct branches: legislative, executive, and judicial. The Constitution serves as the supreme law of the land, outlining the powers granted to Congress for legislation, the president for executive functions, and the judiciary for resolving disputes.
In addition to the government structure, the U.S. economy operates on the principle of a mixed economy, combining elements of both a free market and a command economy. It embraces a free market system for consumer goods, services, and businesses while adopting a command economy approach for sectors such as defense, health care, and retirement benefits. This results in a unique economic orientation that encompasses both capitalist and socialist features.
The Chinese state structure is highly centralized. The President holds significant power within the political system. The Chinese Communist Party dominates all state institutions, controlling every government department, military force, court, and legislative body. The structure of the state follows a clear hierarchy: the President is at the top, followed by the Chinese Communist Party, with the National People’s Congress at the bottom.
At the core of the Communist Party are seven influential leaders who make up the inner circle of the Political Bureau. The wider Political Bureau consists of eighteen members in total. Together, these inner and outer circles hold the highest positions in government, party, and military.
The National People’s Congress serves as the top governing body, comprising approximately 3,000 delegates with diverse political orientations. This Congress supervises the government and is responsible for drafting and enacting laws.
China has a socialist economy characterized by a dominant state, combined with elements of capitalism and private ownership. The Chinese government plays a central role in defining and managing the economy, setting specific goals, strategies, and targets to be achieved.
Like the United States, the Iranian government has three branches: the president, the legislature, and the judiciary. However, a key distinction is that Iran is an Islamic theocracy. The supreme leader holds the highest authority, deriving power from both political and ideological sovereignty. The Constitution of Iran designates the supreme leader to oversee the country's domestic and foreign policies. Additionally, he serves as the commander-in-chief of the armed forces and oversees intelligence and security operations within the Islamic Republic. The supreme leader is nominated by the Council of Guardians.
The president ranks as the second highest official in Iran and is elected by the parliament. The president is accountable to the supreme leader for his executive powers. Iran's parliament is a unicameral legislative body elected by the public through voting. It is responsible for drafting legislation, ratifying international treaties, and approving the national budget. The judiciary also functions as a branch of Iran’s government.
The economic orientation of the Islamic Republic of Iran is centered around an Islamic economic development strategy that emerged after the Islamic Revolution. The government initially aimed to eliminate interest rates from the banking system and implemented strong anti-market policies during the 1980s. However, following the Iran-Iraq war, there was a shift towards pro-market policies, including the adoption of a structural adjustment program designed by the World Bank and the International Monetary Fund. The founder of this approach emphasized strong support for property rights and the role of the private sector, drawing on Shiite traditions.
The political, economic, and governmental orientations of a country are shaped by its political philosophy.
American political philosophy is founded on three key doctrines: natural rights, republicanism, and constitutionalism. Democracy serves as the foundation of the government, embodying the belief that it is a government of the people, by the people, and for the people. Individual liberty and freedom are considered core values. Recent debates have focused on the significance of free elections and a free press in contrast to the need for social and economic democracy. Key issues in these discussions include women's rights, civil liberties, economic justice, and the fight against racial discrimination.
Today, political philosophy plays a significant role in shaping the U.S. economy. Due to the shortcomings of the market economy, there is a growing demand for a stronger government presence in the country. The United States has transitioned into a mixed economy that incorporates elements of both capitalism and socialism. This mixed economy upholds property rights and allows for free economic transactions while also endorsing an active government role in achieving social objectives and providing public goods.
Chinese political philosophy primarily originates from Confucianism, which was developed by the renowned Chinese thinker Confucius. He discussed the role of government and the legitimacy of rulers, asserting that a ruler must be virtuous. According to Confucian philosophy, the behavior of the people is influenced by their ruler, and a morally upright leader determines the state's moral character. Given that people are inherently selfish and driven by relentless desires, without a virtuous leader, society can descend into chaos and disruption.
In more recent history, Mao Zedong shifted China's political direction after the revolution by initially adhering to the Soviet development model. However, the Sino-Soviet split in the 1950s led Mao to abandon Marxism-Leninism in favor of Maoism, a uniquely Chinese interpretation of communism. Under Deng Xiaoping's leadership, China's political philosophy transitioned to Market-Socialism. The current economic-political philosophy is based on the constitution established in 1982, which encompasses several civil rights, including freedom of speech, press, worship, the right to a fair trial, and property rights. However, in practice, these constitutional rights are often not upheld.
In present-day Iran, the political structure is based on Velayat-e Faqih, or the rule of the Islamic jurist. This system was envisioned by Imam Khomeini, who argued that the government should adhere to Sharia law. An Islamic jurist oversees the country’s political framework to ensure that the government remains aligned with the Quran and Sharia. The rule of Islamic jurists is rooted in the belief that, in the absence of Imam Mahdi—the Hidden Imam and the twelfth imam in Shia belief—the highest and most virtuous clergy should supervise the government. Today, the concept of Khomeini's influence continues to shape Iran's political landscape.
In Islamic economic philosophy, property ownership is categorized into three types: Absolute, Public, and Private. Absolute ownership belongs to God, while public ownership refers to the natural resources found on land, at sea, and in space, which are considered to be owned by the entire community. Private ownership, on the other hand, pertains to the wealth or possessions that individuals earn through their labor. In Islam, wealth is not viewed as something abundant; rather, it is meant to circulate among all levels of society.
The world needs to revive the ideas of classical liberalism, with a focus on individual freedom as the top priority. The principles of classical liberalism—such as freedom, spontaneous order, free markets, and globalization—are essential on a global scale, especially in the face of conflicting political philosophies and orientations.
It is crucial to understand the potential political and economic structures that could emerge. Samuel P. Huntington's "Clash of Civilizations" suggests that international relations are often determined by cultural and civilizational divides. The rise of China and ongoing proxy wars in the Middle East indicate a division based on differing political and economic philosophies.
Today, there is a pressing need to revive classical liberal values, including spontaneous order, civil society, the rule of law, justice, private property, tolerance, and free trade. The support for economic, political, and social freedom is indeed spreading around the globe. Spontaneous order is the best approach to ensure the progress and development of humanity, and it can only arise when various political philosophies are allowed to coexist freely in the world.
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